Fortescue puts key assets on the block

Resources reporter

Fortescue Metals Group is poised to sell off part of its most valuable asset, as the company continues efforts to lower debt and free up enough cash to restart the expansion projects that were halted in September.

The iron ore exporter announced this morning it had received strong interest from investors keen to buy a minority stake in its railway and ports, which are held by Fortescue as a separate subsidiary.

No price indication was given, but analysts have valued the infrastructure assets at between $US4 billion and $US6 billion.

Fortescue shares jumped 13 cents, or nearly 3 per cent, to $4.44 in early trade.

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Export infrastructure is crucial to companies seeking to build iron ore companies in the Pilbara, and the recent downturn in the bulk commodity has left numerous junior players holding stranded iron ore assets hundreds of kilometres from the coast.

Fortescue said the process was being conducted with a "small group of selected investors" but declined to say who they were.

The company has previously courted Gina Rinehart's Roy Hill project as a potential co-tenant, but the two camps have never been able to strike a deal, leading Ms Rinehart to pursue a goal of building a stand-alone railway for the Roy Hill project.

Atlas Iron and Brockman Mining are also investigating transport options for getting some of their iron ore to port.

With deals between mining companies over rail access traditionally hard to complete, the current round of talks is more likely to see a deal struck with a third party transport provider, which would then look to strike separate deals with other miners.

American railway operator Genesee and Wyoming has previously listed the Pilbara as a place it may look for growth beyond its current operations which are mostly scattered across Australia's southern states.

Aurizon is also investigating transport solutions in the Pilbara.

Third party access to Pilbara railways is a cause celebre for Fortescue, which fought in the courts for years to gain access to the railways of BHP and Rio Tinto, before simply building its own.

Fortescue duly became the first miner to sell rail and port access to a third party, when it struck a deal with BC Iron in 2009.

That deal was revised just last week, with BC Iron spending $190 million to own more of the tonnes that are transported down Fortescue's railway.

But Fortescue chief executive Nev Power warned this morning that rail access would not be given away cheaply, declaring that any sale from the current talks would be at "full" market rates and would only be approved if it did not affect the efficiency of Fortescue's own mining operations.

Macquarie Capital, which recently helped Fortescue sell a power station, is advising Fortescue along with Lazard.

Fortescue is expected to announce the restart of its Kings iron ore project - which was halted amid a debt crisis in September - as early as this week.